Question

How optimism or hope is important in the time value of money and opportunity cost concepts?

Answer 1

Time value of money concept will advocate that the value of money will be going down with time because of the factors like inflation because the similar amount of money available today will be having a worth higher than the similar amount of money available tomorrow.

Optimism or hope is important in time value of money concept or opportunity cost concept because they will be believing that the investor will be getting other opportunities of being invested into the market and making a higher rate of return so they are trying to always factor into hope and optimism into the overall valuation because time value of money concept will be relying upon the hope that the money value will be going down with time but in various areas, we see that there is a changing cycles and it happens otherwise in short durations, so opportunity cost will also believe that there are other opportunities available and investor is trying to take one opportunities by letting go another opportunity so these are primary fundamentals of time value of money and opportunity cost that there will be better opportunities and there is hope for higher inflation in the future.